SThere are similarities between the U.S. and European
refinery investment situations. Reduced profits are impacting capital for
investment expenses, but we have seen less press about European project
delays than U.S. delays.

SThe major focus of European refinery projects is increased
hydrocracker capacity. However, projects also include over 300 thousand
barrels per day of distillation capacity expansions and 150 thousand barrels
per day of additional coking capacity.

SRefinery projects are concentrated in southern Europe
(Spain, Portugal, Italy and Greece).At about 2/3 of projects are in that region, with the other third in
Eastern Europe.

SIn 2009, talk of refinery closures has increased in Europe.
The recently started-upReliance
export refinery in India and potential new capacity in the Middle East are
adding to concerns already triggered by lower utilizations.Not only does new capacity increase surplus
supply, it is generally quite efficient and thus very cost competitive,
adding much pressure to less efficient facilities.